One by One, Protesters Interrupt Supreme Court

The disruption came shortly after the justices took their seats on the bench at 10 a.m., when a woman rose in the back of the courtroom and yelled, “Overturn Citizens United.” She was hustled from the room. WASHINGTON — The Obama administration may need the vote of a frequent conservative antagonist on the Supreme Court to preserve a decades-old strategy for fighting housing discrimination.

A case over the meaning of two words in a federal housing-discrimination statute quickly became a debate about the proper way to address racial disparities as U.S.Washington — A sharply divided US Supreme Court on Wednesday took up a challenge to the Fair Housing Act (FHA) in an action that liberal critics say could gut the major civil rights provision.

WASHINGTON—The Supreme Court divided into ideological camps Wednesday as it considered whether fair-housing lawsuits can proceed against practices that allegedly promote racial segregation even without proof of intentional discrimination. Supreme Court justices sparred with lawyers and among themselves over the statistical method for determining discrimination known as “disparate impact.” The case, Texas Dept. of Housing vs. The doctrine — known as “disparate-impact” — came under fire from several conservative justices at an oral argument. (Here’s a link to the transcript.) At the same time, the court’s four liberals seemed convinced that the entrenched feature of fair-housing enforcement was justified by legal precedent and practical realities of the housing market, reports WSJ’s Jess Bravin. At issue in a case from Dallas, Texas, is whether the housing law authorizes lawsuits over racially neutral measures that nonetheless disproportionately impact minority residents.

The Inclusive Communities Project, represents a long-awaited test of disparate impact, which critics say allows the federal government — or allied non-profit groups like Inclusive Communities — to sue businesses and housing authorities for committing racial discrimination not because an identified person discriminated but because the racial outcome was skewed one way or another. Disparate impact allows one to prove that a policy is discriminatory by only showing that its results disproportionately affect one group of people—even if the discrimination wasn’t intentional. Liberals support the so-called disparate impact theory of civil rights enforcement, while conservatives warn that such an approach could lead to racial quotas in housing and other areas. Roberts Jr. seemed to take the protest in stride. “Our second order of business this morning …” he started to say, but he was interrupted as a second protester rose, followed, one by one, by five more. The case has attracted significant attention, with friend-of-the-court briefs filed by various civil rights groups, 17 states, and 20 cities and counties.

Civil rights organizations have speculated that the court took up the case to knock out such lawsuits, which have long been criticized by banks, mortgage companies and conservative groups. As ICP noted in its Supreme Court brief, Texas placed 92.29 percent of its tax-credit Dallas housing projects in minority census tracts before ICP challenged the practice in 2008.

Scalia said Congress seemed to have such lawsuits in mind when it passed the law in the 1960s, and later amendments in 1988, to eliminate segregation in housing. “I find it hard to read those two together in any other way than there is such a thing as disparate impact,” Scalia told Texas Solicitor General Scott Keller. On the other side, briefs have been filed by a number of conservative groups and business associations, including insurance companies, banks, finance companies, and home builders. The case involves an appeal from officials accused of awarding federal housing tax credits in a way that steered low-income housing into mostly poor, black neighborhoods in Dallas and generally kept the units out of wealthier white enclaves. The FHA prohibits anyone from refusing to sell, rent, or otherwise make unavailable a house or apartment to a person because of their race, religion, or national origin.

The group alleged that agency policies were keeping Dallas neighborhoods segregated and denying blacks a chance to move into safer neighborhoods with better schools. Solicitor General Donald Verrilli argued that disparate-impact suits help to deter practices that harm minorities without justification, such as apartment occupancy limits that disproportionately affect ethnic groups with large families.

After the FHA was enacted in 1968, federal courts and agencies began embracing a broader interpretation of the law’s scope, concluding that, in addition to barring intentional discrimination, the statute also authorizes lawsuits when housing decisions disproportionately harm minority groups. But because of inherent flaws in the tax-credit system, over time the urban-decay problems have tended to surface again and again as new projects age and lose their shine. The case before the high court involves a lawsuit challenging decisions by the Texas Department of Housing and Community Affairs in awarding tax credits for low-income housing in Dallas.

Instead of renewing neighborhoods, these tax-credit decisions have perpetuated segregation and deterred balanced development between northern and southern Dallas. But justices have allowed for exceptions, approving affirmative action plans and other race-conscious efforts that aid minorities. “Racial disparity is not racial discrimination. Under the test that’s been in place for nearly 40 years, once a disparity is shown, a court must decide whether one race-neutral policy could be replaced with another race-neutral policy. Verrilli said the government had held the same view since at least 1992 and added: “it overestimates the efficiency of the government to think that you could get, you know, a supposed rulemakling on an issue like this out within seven days.” Conservative opponents of disparate-impact analysis sensed weakness in the Obama administration’s position as it repeatedly tried to keep these cases from being heard before the nation’s highest court. The issue before the court is whether ICP must prove that state decision-makers’ intent was to segregate minorities or whether proving a discriminatory effect is adequate.

The suit cited a statistical analysis that showed the agency approved disproportionately more applications for housing in minority neighborhoods than in more affluent white suburbs. Scalia told Keller that looking at the “grand goals” of Congress in 1968 to eliminate segregated housing, it seemed possible that lawmakers thought disparate impact cases were acceptable. This selection and allocation of low-income housing units in the Dallas area was the functional equivalent of intentional racial segregation, the group charged. The trial judge ruled that the group had failed to show intentional discrimination but had proved that the way the credits were allocated had had a disparate impact on minority families. Verrilli said such cases were outliers and said typical cases “in the heartland” such as zoning restrictions or occupancy rules are more straightforward.

The crucial moment in the argument came when Justice Scalia said that the 1988 amendments to the law indicated that Congress had intended to include disparate impact claims. “When we look at a provision of law,” he said, “we look at the entire provision of law, including later amendments. A Supreme Court ruling supporting the state could allow authorities to restore outdated policies that effectively ensure perpetuation of segregated pockets of poverty.

Texas has won support from business groups, including the Mortgage Bankers Association, the American Financial Services Association and others arguing that federal housing law should punish only intentional acts of discrimination. When new low-income housing projects are denied to some neighborhoods in favor of dispersing projects to more affluent, nonminority neighborhoods, the downtrodden areas have greater difficulty attracting renewal projects. Justice Stephen Breyer noted that every appeals court to consider the question for the past 40 years has found disparate impact acceptable in the housing context. In that case, the court ruled 5 to 4 that corporations and labor unions have a First Amendment right to spend money on issue advertisements during election season. Breyer, Sonia Sotomayor and Elena Kagan wondered aloud how that could be in light of decisions from 10 federal appeals courts recognizing such claims. “The law has been against you,” Justice Breyer said. “There’s been disparate impact for 40 years.

That led Roberts to ask whether it’s worse to provide housing in neighborhoods where it’s needed, at the risk of ghettoization, or to build it in affluent neighborhoods and risk being accused of avoiding minority residents. “You’ve got to know what you’re shooting at before you can tell if you’ve missed,” he said. “You say you look at what’s causing the bad effect, but what’s the bad effect?” Later, he asked if those two communities both got sued for racial discrimination and each argued their policies were actually helping minorities, could they both win? Employment law isn’t involved, and the long record of court approval of its use in housing discrimination argues against the court ruling for Texas. They can take some encouragement from Justice Anthony Kennedy, the swing vote between conservatives and liberals on the court who spoke little during today’s arguments.

The government argues certain practices, such as unnecessarily restrictive zoning, occupancy limits or ordinances that prohibit converting properties to rental units, can have a large racial impact and no compelling justification. But using statistics to “prove” racism can also drag companies and local governments into expensive litigation for no reason other than their numbers look bad.